Energinet enters into partnership with Siemens Energy and accelerates green transition

Electricity generation and consumption will be multiplied, and over the next four years the West Danish electricity transmission grid will be expanded by approx. 50 new or reinforced 150 kV high-voltage substations. Siemens Energy has won the contract and will thus help Energinet speed up the green transition of the electricity grid's "highways".

Energinet has signed an agreement with Siemens Energy on a comprehensive expansion of the power grid in Western Denmark.

The framework agreement runs for up to eight years and means that Siemens Energy will be responsible for all new construction and reinforcement of 150 kV high-voltage substations in Jutland and on Funen. As the green transition accelerates, there will be a need for a massive expansion of the electricity transmission grid.

By 2030, Denmark must quadruple its electricity generation from wind and solar power, with more to come in the following decades. During the same period, our electricity consumption is multiplied when we switch to electric vehicles and electric heat pumps and convert solar and wind power to hydrogen and green fuels for shipping, industry etc.

"In just a few years’ time, many more high-voltage substations on the electricity grid's ‘motorways’ will be needed in order to secure that the renewable electricity can be connected to the grid and transported around the country. We are incredibly pleased that with Siemens Energy we get a long-term, strategic partnership, thus ensuring that we can keep up with the dramatic development,” says Henrik Riis, CEO of Energinet Electricity Transmission.

Siemens Energy won the contract after a long and thorough tender, where three other companies also bid for the task.

The number of high-voltage substations Siemens Energy is to build or expand, and where this is going to happen, will depend on where the new green electricity generation and electricity consumption will be placed in the western part of Denmark. Some high-voltage substations are already on the drawing board, while other expansions and reinvestments will be added on an ongoing basis. Therefore, the agreement is also a framework agreement of up to approx. DKK 10.5 billion. It is estimated that in the first four years it will amount to approx. DKK 6 billion.

Tim Holt, Member of the Executive Board for Siemens Energy, says, “There is no energy transition without transmission, and that can only happen with the availability of switchgears and transformers. Grid investments are accelerating dramatically in Europe and worldwide, and customers are competing for manufacturing slots. This agreement enables Siemens Energy to plan its capacities, which will benefit both Danish and European energy infrastructure. We are excited to be trusted to deliver on the grid acceleration in Denmark.”

Concurrently with the agreement being made on the expansion of high-voltage substations in Western Denmark, Energinet has cancelled two other tenders. A similar tender for the expansion of high-voltage substations in Eastern Denmark and a tender for cable laying throughout Denmark.

Since Energinet kick-started the major cable and high-voltage substation tenders, the world has been hit by an energy crisis, Russia has invaded Ukraine, and the green transition has accelerated even more around the world. It has increased the prices of raw materials, components, etc. and created uncertainty about the future. The risk of taking on long-term partnership has affected the offers Energinet received.

In the cable area, Energinet believes that the tender prices were too high, Henrik Riis explains.

"Out of consideration for the total costs, we choose to proceed with the substation agreement in Western Denmark only. Otherwise we risk a major delay on our construction projects. That would compromise the green transition. The risk of delay is not as high in Eastern Denmark. Here we estimate that we ourselves can achieve the necessary progress, spending less money and with other forms of contracts. With Siemens Energy handling the expansion in Western Denmark, we can devote more of our own resources to Eastern Denmark," he says.

Energinet will ensure to keep up the momentum of the expansion of the power grid, for example with more limited tenders of tasks. That work is already under way.

"We still need external suppliers to ensure rapid and significant expansion of the electricity transmission grid. The task is enormous, and we will not reach our goal by using the same methods as we did a few years ago. We will continue to offer large and many projects of cable laying and high-voltage substations in Eastern Denmark – just in packages with known projects, where the delivery model is adapted to the nature of the projects," explains Henrik Riis.


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